Johannesburg - Two months of crippling labour turmoil are likely to force South Africa to look again at its economic growth forecasts, the Reserve Bank's deputy governor said on Sunday.
Wildcat strikes that started in the platinum mines have left more than 50 dead and spilled to other industries, undermining investor confidence and tarnishing President Jacob Zuma’s government.
Violent clashes between police and protesters continued over the weekend and more than 70 miners were arrested.
“Growth forecasts will most likely need to be revisited,” Reserve Bank Deputy Governor Daniel Mminele said in a speech to a JP Morgan investor seminar in Tokyo that was posted on the Sarb’s website.
The Reserve Bank’s latest economic growth forecasts were for an average 2.6% this year and 3.4% next - still far short of the rate South Africa reckons it needs to cut unemployment accounting for a quarter of the labour force.
It was not immediately clear whether those growth forecasts, given in September, were the ones Mminele was referring to.
In another knock for South Africa, Standard and Poor’s cut its credit rating on Friday, citing the strikes and social tensions. Moody’s downgraded South Africa in September.
Reacting to the downgrades, Mminele said they were disappointing, but some of the criticism was valid.
Impact of wages
Financial analysts are not only worried by the turmoil, but also by the possible impact on inflation of wage rises that some of the strikers have won - up to 22% in the case of Lonmin [SJE:LON] miners.
The Sarb had yet to see evidence that hefty wage increases were becoming the norm, but would have to keep a close eye on them in case they had a spillover in pushing up prices or expectations of price rises, Mminele said.
Clashes continued over the weekend, nearly two months after police shot dead 34 strikers at Lonmin’s Marikana mine on August 16, the bloodiest security incident post apartheid.
Police broke up a sit-in by nearly 600 miners from a Gold Fields [JSE:GFI] mine demanding the release of colleagues at a police station, about 45km west of Johannesburg. Seventy-two miners were arrested.
Near Rustenburg, in the “platinum belt” about 120km northwest of Johannesburg, police fired tear gas and rubber bullets after a march on an Anglo Platinum [JSE:AMS] (Amplats) mine turned violent. Four protesters were arrested.
President Zuma’s government has been criticised for allowing the strikes to spread, as well as failure to address yawning class divisions and grinding poverty that still characterise South Africa 18 years after the end of apartheid.
Zuma faces a significant threat from members of the ruling African National Congress who are lobbying for his removal as head of the party at a scheduled leadership election in December. He held a “social dialogue meeting” on Friday with union and business leaders and some cabinet ministers to discuss the economy.
But the meeting appeared to deliver little new: Zuma’s office released a statement pushing the need for improved industrial relations and condemning the violent strikes.
Separately, mines minister Susan Shabangu was quoted by local media on the need for the ANC to drop talk of nationalisation. Some members of the party have lobbied for increased state intervention in the industry.
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